Information & Management 50 (2013) 446–456

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Information & Management

journal homepage: www.elsevier.com/locate/im

Case studies in research

A value-based approach to the ex-ante evaluation of IT enabled

business process improvement projects
Robyn L. Raschke a,1, Sagnika Sen b,*
a
University of Nevada Las Vegas, 4505 S. Maryland Parkway, Box 456003, Las Vegas, NV 89154-6003, United States
b
Pennsylvania State University, School of Graduate Professional Studies, 30 E Swedesford Road, Malvern, PA 19355, United States

A R T I C L E I N F O A B S T R A C T

Article history: In this study, we propose a value-based management approach for assessing the potential for process
Received 12 August 2012 improvements enabled by an information technology (IT) solution. Based on activity based management
Received in revised form 9 July 2013 concepts, we perform a granular, process level analysis on workflow structure and associated resource
Accepted 12 July 2013
consumption to provide quantifiable measures of potential improvement prior to system implementa-
Available online 22 July 2013
tion. The proof of concept of this approach is illustrated in a southern United States county in need of
integrating different government branches through an ERP implementation. Based on prior research, we
Keywords:
first provide a catalog of non-value added (NVA) activities that can be used in management control and
Business process improvement
Quantitative assessment
governance procedures for the systematic identification of process inefficiencies. Next, by breaking
Information technology down processes to the level of atomic activities, we show that minimizing NVA activities provides a
Investment evaluation systematic means to mitigate process inefficiencies. A significant observation is that different NVA
Value based management activities may impact process performance to varying degrees. Consequently, line items in the request
for proposals (RFP) should be weighted accordingly during the vendor selection process, contrary to the
common practice of treating all line items equally.
ß 2013 Elsevier B.V. All rights reserved.

1. Introduction of proper measurements [27] – a lack of well-defined performance

Business process improvement (BPI) is gaining significant
momentum as 21st century organizations continually seek to
optimize their underlying processes to achieve higher quality at
reduced cost and cycle time [82]. A recent survey reveals that 45%
of organizations expect increased engagement in business process
improvement projects. Indeed, BPI projects are one of the most
important justifications for information technology spending [44].
The increasing number of BPI projects brings an imperative for
managers. The potential performance improvement must be
assessed before project initiation. While performance improve-
ments from a BPI project may be observed along many dimensions
such as reduced cost and/or time, better quality, increased
productivity, etc., tracking performance along these metrics
requires appropriate management control methods that enable
precise measurement [56]. In other words, quantitative assessment
of process performance is an integral component of BPI success.
While modern businesses increasingly focus on BPI, two of the
top ten reasons for unsuccessful BPI initiatives concern the absence
* Corresponding author. Tel.: +1 610 725 5361.
E-mail addresses: robyn.raschke@unlv.edu (R.L. Raschke), sagnika.sen@psu.edu
(S. Sen).
1
Tel.: +1 702 895 5756.
measures and a lack of monitoring. Clearly defined and measurable
operational goals, such as percentage reductions in cost/time/
defects, are cited as prerequisites for success. However, precise
estimates of such improvements prior to implementation often
prove difficult. This is further complicated by the fact that BPI is
highly intertwined with information technology (IT). For most
businesses, IT is essential for their core and support processes [21].
Consequently, any process improvement is almost inevitably led
by IT. ‘‘. . .it’s that you just can’t improve any process without IT being
integrally involved. Most companies don’t set out to do an IT project.
They set out to fix distribution or hiring or pricing, and they can’t move
that needle without better IT’’ [61]. It naturally follows that
assessing BPI initiatives is therefore inseparable from evaluating
the impact of the proposed IT solution.
In this paper, we address management’s need for appropriate
methodologies for ex-ante evaluations of IT-enabled business
process improvement projects. Furthermore, we demonstrate how
such pre-assessment methodologies can subsequently enhance
the selection of the appropriate IT solution to achieve the desired
process improvement. To this end, we adopt a ‘‘value based
management’’ framework [35]. Our focus is on quantifying the
precise value contribution of the different processes and sub-
processes in an end-to-end process. To demonstrate the viability of
our approach, we employ concepts from activity based manage-
ment (ABM) – a practice within the umbrella of the value based

0378-7206/$ – see front matter ß 2013 Elsevier B.V. All rights reserved.
http://dx.doi.org/10.1016/j.im.2013.07.007
 R.L. Raschke, S. Sen / Information & Management 50 (2013) 446–456
management framework [35] – in the pre-evaluation phase of a BPI
project for a case management process in a large country court
system in the southern United States. To estimate the potential
improvement, we first identify sub-processes and activities in the
entire case management business process. Next, cost analysis is
employed to apportion resource consumption to those specific
sub-processes and activities. These activity costs are divided into
two categories: value-added (VA) and non-value-added (NVA).
Value-added activities are those that contribute directly to the
desired process outcome, while non-value added activities are
defined as those that contribute too little or no value to the desired
outcome. The potential for process improvement is then evaluated
based on how well the NVA activities can be mitigated through
candidate IT solutions from different vendors. An important step in
this vendor/solution selection process is the use of a non-
traditional request for proposals (RFP) where functional line items
are weighted according to their potential NVA reduction capabili-
ties.
The contribution of our work is to analyze the potential
application of a value-based technique using ABM as a standard
methodology for process analysis to provide usable and useful
information on resource consumption that can contribute to an ex-
ante quantitative assessment of an IT-based process improvement.
As we illustrate in this paper, decomposing business processes into
sub-processes and activities followed by the subsequent minimi-
zation of NVA activities in every possible sub-process provides a
systematic and rigorous methodology. The NVA detection process
is guided by a catalog of performance inhibitors developed through
an extensive literature review. The different NVA categories
identified ex-ante are also helpful in pinpointing weaknesses in
the current process. This information may be utilized ex-post for
selecting appropriate key performance indicators (KPIs). For
example, the presence of Technological Silos – an NVA category
– in a business process may be indicative of the need to monitor a
productivity KPI, as the lack of technological support hinders
productivity. Furthermore, a significant observation from our work
is that different NVA activities may impact process performance to
varying degrees. Consequently, line items in the RFP should be
weighted accordingly during the IT solution/vendor selection
process, in contrast to the common practice of treating all line
items equally.
The remainder of the paper is organized as follows. In the next
section, we provide a brief overview of the methods used for
evaluating process improvements and IT investments. In Section 3,
we discuss the suitability of the value-based technique using
activity-based methodology for assessing process improvements
and technological and organizational inhibitors that contribute to
NVA, followed by the development of an ABM based methodology
for measuring process improvements in Section 4. Section 5
illustrates the implementation of our approach. In Section 6, we
conclude with implications for research and practice.
2. Literature review: business process, performance, and the
role of IT
To be able to measure business process improvements led by IT,
an understanding of the term ‘business process’ is deemed
necessary along with a review of the methodological approaches
to measure both process improvements and IT effectiveness as it
relates to organizational performance. Our criteria for selecting a
specific methodology from a set of possible candidates is guided by
the requirements elicited from the academic and practitioner
literature on process management. First, the metrics used should
be definable, measureable, and preferably not subjective in nature
[27,66]. Second, the methodology should inform us how the
process improvement will occur, not only what to measure [1].
447
Finally, as the process improvement is enabled by IT, the
methodology should shed light on the causal linkage between
IT, business processes, and firm performance [5,19,50].
2.1. Business processes
Both academics and practitioners have defined business
process with slightly different emphasis and focus. For example,
Davenport [15] defines business process as ‘‘a structured, measured
set of activities designed to produce a specific output for a particular
customer or market. It implies a strong emphasis on how work is done
within an organization, in contrast to a product focus’s emphasis on
what’’ (pp. 5). According to Laguna and Marklund [43], a business
process ‘‘describes how something is done in an organization’’ (pp.
3). The business process management common body of knowledge
[2] of the association of business process management profes-
sionals (ABPMP) defines process as a ‘‘set of activities or behaviors
performed by humans or machine to achieve one or more goal. . . .
Processes are composed of a collection of interrelated tasks or activities
which solve a particular issue. In the context of business process
management, a business process is defined as end-to-end work which
delivers value to customers’’ (pp. 23). While the definition of what
constitutes a business process varies slightly across academics and
professional organizations, each variation of the definition
emphasize that ‘activities’ constitute an essential part of a business
process. Inherently, a ‘Business Process’ can be conceptualized as a
(set of) activities that firms engage in to accomplish some business
purpose or objective [55,60].
2.2. Process performance/improvement
From the discussion of business processes in the preceding
section, it is apparent that measuring process improvements
essentially entails an analysis of how activities within an end-to-
end business process will be impacted by the proposed enhance-
ment project. Those impacts are reflected in and may be captured
through two types of performance – operational efficiency and
operational effectiveness. Operational efficiency relates to measures
such as cost, time, product/service quality, and customer satisfac-
tion [16] and should be measured both before and after system
implementation [66]. Operational effectiveness, however, relates
to the benefits such as increased revenue and market-share that
arise from implementing systems to support various activities
[22]. In summary, metrics for both operational efficiency and
effectiveness – the gauges to measure process improvement – are
essentially quantitative in nature.
Several methodologies and frameworks exist for evaluating
process performance from the perspective of process maturity. The
foundation of process maturity models lies in the view that
organizational capabilities evolve in a stage-by-stage manner
along a logically anticipated path and that each of these stages can
be clearly defined, managed, measured, and controlled [65]. The
underlying hypothesis is that maturity leads to the institutionali-
zation of policies, standards, and organizational structures [31]
that ultimately leads to better control, more visibility into the
future, and the ability to continually set higher goals [49].
Numerous maturity models have been developed by academics,
practitioners, and international consortia [13,25,31,45,57,68].
Many of these models trace their origins to the capability maturity
model (CMM) and its subsequent capability maturity model
integration (CMMI) developed by the Software Engineering
Institute at Carnegie Mellon University [71]. The CMMI represents
a five stage framework to assess an organization’s process maturity
level and provide roadmaps for improvement [42].
In addition to maturity models, statistical methods such as six-
sigma and statistical process control (SPC) rely on rigorously
448 R.L. Raschke, S. Sen / Information & Management 50 (2013) 446–456
collecting and analyzing performance data to reduce variability in
processes and thereby enhance process efficiency [48]. Value
stream mapping (VSM) is a methodology that originates in lean
manufacturing concepts and focuses on material and information
flow from the beginning to the end of a product/service with the
objective of reducing waste along the flow [2]. Activity-based
costing (ABC) is an accounting methodology providing data on how
costs are consumed by the activities within a process, along with
before and after comparisons [4].
Among the methodologies discussed above, maturity models
such as CMMI or the process maturity model [31] and statistical
methods are not appropriate for the problem at hand. Statistical
models are based on data collected during and after process
execution and hence cannot be used for future projections.
Maturity models, however, are applicable at the organizational
level and are reflective in nature. They are suitable for post hoc
analysis and charting a roadmap for improvement, as shown in
various case studies [58,67]. However, they do not represent a
quantifiable measure of specific improvements to a specific
process, and hence are not suitable for our purpose. In this
respect, both VSM and ABM apply to end-to-end business
processes and provide precise measures of process improvement.
The focus of VSM is the reduction of waste in material and time
along the value chain, while ABM focuses on minimizing the total
cost of production. We choose ABM for the purposes of our study.
The rationale is elaborated in greater detail in Section 3.1.
2.3. IT evaluation decisions
BPI initiatives are nearly always enabled by IT solutions.
Therefore, measuring an IT-enabled process improvement is
closely related to the question of evaluating and selecting the
appropriate IT solution (and vendor). In this respect, the literature
on IT investment provides a rich theoretical base.
Large scale IT investment decisions are generally preceded by
some ex-ante evaluation methods. Ex-ante evaluation focuses on
estimating the future impact of an information technology
investment. The evaluation may employ qualitative and/or
quantitative techniques depending on the decision perspective
used during appraisal [34]. As IT investments have traditionally
been addressed within the realm of an organization’s capital
budgeting process, quantitative measures stemming from the
financial and accounting disciplines play a key role in the decision
process [34,72].
Examples of the most commonly used financial measures
include: cost benefit analysis (CBA), return on investment (ROI),
net present value (NPV), discounted cash flow (DCF), and payback
period method (PBP). CBA is a popular method in which the
benefits of the project must outweigh the costs for the project to be
undertaken. The CBA approach attempts to place a monetary value
on each element contributing to the cost or benefit of the project
[24]. Subsequent financial evaluation often follows CBA such as
NPV, DCF, ROI and the payback method. NPV uses a discount rate to
calculate the present value of all cash inflows and outflows from
the IT project. One major drawback of NPV is determining an
appropriate discount rate to apply to the IT project [54,69]. DCF is a
method that attempts to provide the present worth of the future
cash flows of a project. Finally, the payback period (PBP) method
attempts to determine the earliest period in which the costs of the
project are recovered [54].
2.4. Process oriented evaluation of IT investments
While the ex-ante financial and accounting measures discussed
above are useful in deciding whether to acquire an IT system, many
of the measures rely on subjective assessments rather than
concrete ones [7]. More important, most of these techniques
attempt to directly link an IT investment to firm performance.
Subsequent research established that business processes are the
intermediate link between IT investment and firm performance
[19]. Consequently, a stream of research has been devoted to
exploring the link between IT and business processes and its final
effect on firm performance [5,19,50]. This stream of research
argues that because IT impacts firm performance via intermediate
business processes [19], it is appropriate to use process level
variables as the dependent variable of interest [50,79]. Subse-
quently, numerous recent studies have focused on the value
contribution of IT at the process level. Subramani [73] investigated
the motivation of suppliers to invest in supply chain management
(SCM) solutions. The results suggest that such investments are
motivated by the desire to create relationship specific investments
in business process and domain knowledge. The effect of process
characteristics on the value of web-based business-to-business
procurements is studied in Subramani et al. [74]. In context of the
customer service process, it is shown that IT interacts with firm
specific resources and capabilities (shared knowledge and flexible
IT infrastructure) in complex ways, resulting in variations in
process performance across organizations [64]. Another study by
Elbashir et al. explores the causal linkages among IT, business
process and organizational performance in the context of business
intelligence systems [22]. Their study underscores the role of
context in designing performance measures of IT-intensive
systems. In investigating the interaction of IT and process redesign,
Ramirez et al. [62] establish that IT is a necessary complement to
process redesign efforts, and together they result in higher levels of
production efficiency and market value.
It must be noted here that the focus of studies adopting process
orientation to IT value is to establish a causal chain linking IT,
business process performance and organizational performance. As
such, most of these studies investigate final outcome variables
such as production efficiency [62] or process characteristics
[64,74]. Thus, they have enriched our understanding of IT and
process performance by establishing (1) the conditions and
contexts under which IT yields positive process performance
[22,74] and (2) that process performance can ultimately be linked
to organizational performance [5,64,73,76]. However, how and to
what extent an IT solution impacts the elements within a process to
yield higher levels of process performance remains an area worthy
of further exploration. In this regard, the locus of value [38] is an
important concept representing the primary level of analysis
where the business value contribution of IT is measured. Research
suggests that both the potential and realized value of IT should be
considered [17] and that ‘‘Lower level (e.g., individual or business
process level) measures facilitate clear and complete mappings to
measures that capture the value of IT at its point of creation (the
locus of value)’’ [18].
3. An activity-based framework for measuring IT-enabled
business process improvement
From the discussion of the extant literature in the previous
section, it is apparent that because business processes are the
intermediate link between IT and business value (measured
through organizational performance), assessing IT-enabled BPI is
closely related to a process-oriented evaluation framework for IT
investments. In this respect, the IT to business process and
business process to firm performance links need to be explored at
the ‘micro-level’. To this end, activity based management (ABM)
provides a unique solution, as it focuses on the most granular level
within a process – the activity. In the following, we briefly discuss
ABM and its suitability for the purposes of our study.
 R.L. Raschke, S. Sen / Information & Management 50 (2013) 446–456 449

3.1. Activity based management 3.1.1. ABM in IT evaluation research

ABM evolved from the accounting practice of activity based
costing (ABC), a management accounting approach that focuses on
‘‘cost drivers’’. A cost driver is defined as an event associated with
an activity resulting in the consumption of the firm’s resources [4].
For example, the resources required (both technology and staffing)
to file a case. Activities are further divided into value added (VA)
and non-value added (NVA) categories. For example, manually
filling a form that is subsequently digitized would be considered
NVA, whereas sending status reports to upstream and downstream
stakeholders in the case management process is considered VA.
ABM takes the knowledge gained from ABC one step further in
identifying opportunities for improvement by eliminating or
reducing NVA activities [30].
It has been proposed that activity based costing should be used
as a guide to corporate strategy [12]. A subsequent study
established that ABC is indeed associated with improved financial
performance when it is used in conjunction with other strategic
initiatives [8]. ABC can also be used as a complement to balanced
scorecard performance measures [47,77]. In the area of operations
management, Gupta and Galloway [30] illustrate how ABM may be
integrated with total quality management (TQM) initiatives and
call for ABM systems to be implemented across business functions.
ABM is also shown to yield a better appreciation of the actual cost
of quality, as it takes a process view of production [78].
That ABM enables useful insights into the most granular level of
a process – the activity – makes it an excellent tool for
quantitatively assessing the impact of IT on process performance.
In other words, ABM provides a lens to explore how a process may
be improved by a proposed IT solution. More important, this
information can be available prior to implementing an IT solution
as opposed to the traditional financial measures such as ROI, which
provide information only after system implementation. In sum-
mary, ABM, as a methodological framework, nicely meets the
criteria set forth at the beginning of Section 2.
ABC has been utilized as a method for justifying electronic data
interchange (EDI) [32]. After comparing several investment
methods, the authors conclude that ABC, in conjunction with
simulation, is the most suitable. Guidelines to using ABM to
evaluate IT investment are provided in Peacock and Tanniru [59].
They classify IT investments into four categories based on how
focused the IT application is and the level of difficulty in measuring
the impact of IT. They argue that the ABM framework is most
suitable when the IT application is focused on specific activities
and the level of complexity in measurement is low. Kim [40]
applied an ABM framework to quantify the cost savings resulting
from an ERP implementation by allocating the various cost
components – hardware and software, consulting and training,
maintenance and training – to different business processes.
Our approach, while based on the ABM framework, goes one
step further in understanding ‘cost drivers’ as contributing value
added and non-value added activities within a business process.
This information is used to provide an assessment of the
anticipated impact on project performance and identify areas
for improvement. The appropriate IT solution is based on the
projection of the degree of improvement while considering the
costs of the project. In other words, the IT solution must minimize
the amount of NVA to attain a reasonable return on investment.
Section 4 describes the steps taken toward allocating ‘cost drivers’
with respect to the Case Management process in our study.
3.2. Non-value added (NVA) activities as inhibitors of process
improvement
Our primary focus is on the non-value-added (NVA) activities in
ABM. NVA activities are defined as those activities that generate a
zero or negative return on the investment of resources and usually
can be eliminated without impairing a process. To identify the
sources of such NVA, we first conducted a comprehensive
literature search using keywords such as process performance,

Table 1
Inhibitors of process performance.

NVA Description Examples

Organizational inhibitors
Strategy Lack of vision, oversight, and planning among the  Accountability [41,75]
middle and top management to align processes  Goals and objectives [10]
with stated mission and goals  Process owner/succession plan [75]
 Risk management [36,41,75]
 Proper strategy [3], strategic initiatives [53]

Resource Lack of resources required to achieve/complete a  Financial [80]

task  Human resources [53]

Training and education Lack of appropriate instructional resources  Innovation and learning [10,75]
 Training [75]

Standardized policies and procedures Lack of organization-wide standard business  Performance measure [23,26,81]
rules and governance framework  Process definition [11,29]

Knowledge and information management Lack of organizational understanding with regard  Information management [10,11,23,29,41,81]
to underlying business processes, their  Shared knowledge [64]
interrelations, and associated information flow  Communication/information sharing [11,29,37,41]
 Learning capacity [53]

Culture Organizational norms, beliefs, politics that are not  Political risk [11]
conducive to change  Collaboration/territorial issues [37]
 Cultural readiness [53]
Technological inhibitors
Technology Lack of technology infrastructure and/or  Disparate systems/lack of interoperability [33,63]
architecture and application  Flexible technology [10]
 Flexible infrastructure [64]

IT resource/capability Lack of firm specific tacit IT knowledge that is  Underutilized IT [41]

valuable, rare, and costly to imitate  Managerial IT Knowledge [37,46,63,75]
450 R.L. Raschke, S. Sen / Information & Management 50 (2013) 446–456

business process risk, and business process reengineering success/
failure. This list of articles was further augmented with a forward
citation search of those articles that had been cited 25 or more
times by other scholarly works.
Next, we systematically categorized the various inefficiencies
and ineffectiveness in business processes as mentioned in the
above literature. We adopted the widely used people–process–
technology paradigm [6,20] and grouped the inhibitors into two
broad categories: (1) organizational and (2) technological. As
both the people and process constructs are more contextual to
an organization than the technology construct, they are
represented under the umbrella term ‘Organizational’ (as in
[70]).
Table 1 provides details within each category along with
examples. In the following, we provide brief descriptions of
subcategories within the organizational and technological NVAs.
3.2.1. Organizational inhibitors
3.2.1.6. Culture. Organizational culture facilitates (or inhibits) an
organization’s predisposition to change by influencing the orga-
nization’s ability to learn, share information, and make decisions
[53]. Clemons et al. [11] refer to this as political risk- either because
of resistance or a gradual loss of commitment, projects may face
eventual collapse. Failure to anticipate resistance and politics, as
well as a failure to properly communicate reasons for change, often
contribute to inefficient and ineffective workflows [29].
3.2.2. Technological inhibitors
3.2.2.1. Technology. The lack of appropriate technological infra-
structure and application systems are frequently cited as sources of
inefficiencies in business processes. These include, but are not
limited to, disparate systems that are unable to communicate with
each other [33], insufficient/inappropriate software systems [23],
rigid hardware and/or applications [10], limited telecommunica-
tions infrastructure, etc.

3.2.1.1. Strategy. Management’s lack of vision, oversight, and
planning to align business processes with organizational goals
give rise to unnecessary obstacles to process execution. In the
context of higher education, leadership is cited as the foremost
reason for BPI success [10]. A major reason for the high failure rates
of business process reengineering was that the efforts had not been
connected to corporate goals [3]. Strategic initiatives are cited as
critical factors for successful ERP implementation [53]. In general,
organizations need to have appropriate management structures
that foster accountability [41] and risk management [36,41,75].
3.2.1.2. Resource. A lack of financial resources often results in
inadequate systems and tedious manual processes, whereas the
absence of appropriate human resources stymies the flow of
information among different stakeholders. Large scale process
improvement projects require significant capital investments, and
the scarcity of such investments may lead to poor IT infrastructure
[80]. However, interorganizational processes benefit from appro-
priate coordination, collaboration, and incentive structures among
the human agents [53].
3.2.1.3. Training and education. This refers to the inability of an
organization to equip its employees with appropriate instructional
resources required in performing their day-to-day jobs [75].
3.2.2.2. IT resources and capability. According to the resource based
perspective, this refers to the ‘‘tacit, socially complex IT resources
(such as shared knowledge)’’ [37] that result from the interaction
of a firm’s IT assets (such as infrastructure and application
portfolio) with non-IT resources (such as managerial capability). A
firm’s IT capability refers to competencies built upon explicit IT
resources but embedded in organizational know-how in such a
way that it is valuable, rare, and costly to imitate [64]. It is these
implicit, path dependent capabilities, not generic IT assets, that
explain the variances in the relationship between IT and firm
performance [64].
4. Activity based methodology for measuring IT-enabled
process improvements
The activity based framework, discussed in the previous
section, may be utilized in developing a methodology that not
only assists in estimating the potential for BPI, but also in selecting
a vendor. In the following, we elaborate the steps involved in
applying this methodology. A brief visual representation is also
provided in Fig. 1.
4.1. Identify activities

This requires a process modeling approach. Usually, hierarchi-

3.2.1.4. Standardized policies and procedures. Business rules and
cal process modeling techniques [9,43] are employed. Intensive
governance frameworks are a means for organizations to achieve
interviews with process stakeholders and actors are involved. The
consistency in process execution and performance, the absence of
outcome of this step is a detailed process map/workflow with
which may lead to superfluous work, high degrees of variance in
output, and the inability to monitor and track performance [11,29].
It has been noted that many organizations lack an understanding of
their business processes, which is crucial for BPM success [23].
Public and private organizations that are well known for their IT
performance leadership and management expertise not only
implement comprehensive performance evaluation frameworks,
they also ensure that such measurements are linked to appropriate
levels of the organization [26].

3.2.1.5. Knowledge and information flow. Knowledge and informa-

tion management is crucial for connecting isolated ‘‘pockets of
innovation’’ [28] within an organization. IT led projects often fail to
capture the business and human dimensions of processes [53] and
require that systems (both organizational and technological) be in
place to achieve a synergy among the business, human and IT
dimensions of an organization [23,28]. The level of shared
knowledge has been positively associated with process perfor-
mance [37]. Fig. 1. ABM based methodology for measuring IT-enabled process improvement.
 R.L. Raschke, S. Sen / Information & Management 50 (2013) 446–456 451

subsequent levels where processes are broken down into 5. Case study: ERP implementation for an integrated court
subprocesses and activities. In addition to interviews, organiza- system
tional policies, manuals, and formal process definitions, if any, may
also be used. 5.1. Background

4.2. Allocate costs
Once the process workflow is mapped, identifiable labor and
resource costs for the processes are allocated based on the output
measure (e.g., the number of applications processed in a month)
[52]. In consultation with process stakeholders, these costs are
then categorized into VA vs. NVA.
4.3. Perform NVA analysis
In this step, the various NVA activities as identified above are
labeled according to the categories in Table 1. Next, for each of the
NVA categories within a process/subprocess, the potential reduc-
tions in NVA with the BPI project being considered are estimated.
This step also requires consultation with process stakeholders. This
helps to calculate an aggregate NVA impact score for each of the
process/subprocesses.
For example, process X (manage customer information), may be
identified as having 3 major NVA categories – technological,
resource, and culture, that can be potentially reduced by 80%, 60%,
and 20%, respectively, by implementing the IT project. This
information is used in calculating a total NVA impact that is used
in the subsequent step discussed in the next paragraph.
4.4. Evaluate request for proposals (RFP)
Finally, a weighted NVA impact is calculated to score each of the
functional line items (as these correspond to the activities in the
process workflow) in the RFP. Each vendor responds to the RFP by
indicating whether its solution addresses the functionality. If a
particular functional requirement was not part of the vendor’s
solution, the vendor needs to provide additional cost information
to fulfill this requirement. Utilizing the weighted NVA impact, the
total amount of NVA reduction from each vendor’s solution and the
subsequent potential benefit can be calculated using the following
formula: potential benefit = (amount of total NVA cost of IT
project)/cost of IT project. The vendor with the highest potential
benefit should be chosen.
In this section, we demonstrate the applicability of the above-
described methodology in estimating potential process improve-
ments through a case study. The study took place in a county in the
southern United States that desired to improve its case manage-
ment process. The county has eleven different court and law
enforcement departments of the judicial system that are poten-
tially involved in the case management process: Clerk of courts,
District Attorney, Indigent Defense, Juvenile Court, Magistrate
Court, Pre-Trial Services, Solicitor’s Office, Superior Court, Sheriff’s
Office, Probate Court, and Drug/DUI Court.
The county experienced duplications of effort among the
various departments within the court system. Manual or redun-
dant efforts created by the inability to electronically transfer
records among the departments caused delays throughout the
court process. For example, one particular department retained a
pool of employees for the specific purpose of retyping information
when another department transferred a case file. Due to these
inefficiencies and the need to utilize taxpayer resources more
appropriately, the county recognized the need to effectively share
information among their various courts and law enforcement
branches and determined that all departments needed to integrate
their disparate information systems and software applications
using one system. The county’s main objective was to reduce
inefficiencies in its case management process that begins at the
initiation of a case and terminates in its trial.
A committee representing each of the eleven departments was
formed to oversee vendor selection and project implementation.
All committee representatives of their respective departments
agreed that one vendor’s ERP solution would be selected and
implemented throughout all departments to avoid any issues of
integrating applications between different vendors. This way, the
committee determined, the system would be simpler to imple-
ment, manage, and maintain while controlling costs.
Prior to using the ABM framework, the committee had
narrowed their field of viable vendor candidates to three but
failed in their RFP attempt to select one vendor for this project.
Specifically, various committee members assembled into three
different groups supporting their ‘favorite’ vendors, with each

Table 2
Sub Processes and Activities within the Clerk of Courts Office.

Sub-Processes Activities

Case initiation This activity includes all tasks related to

- Case entry into the Clerk of Courts office
- The creation of electronic and paper case files
Service summons processing This activity includes all tasks related to the creation, delivery, and tracking of service summons
Subpoenas processing This activity includes all tasks related to the creation, delivery, and tracking of subpoenas
Fines & fee management This activity includes all tasks related to the intake and tracking of fines and fees. Includes deposit
and delivery to the bank, report creation and payment to the County and State
Case update processing This activity includes all tasks related to updating case files with additional information as it is received.
Calendar & pre-court management This activity includes all tasks related to court date assignment and creation, maintenance, and noticing
Hearing management This activity includes all tasks related to time spent in court during hearings
Failure to appear processing This activity includes all tasks related to an individual’s failure to appear in court. This includes the creation
and management of notices, bond forfeitures, warrants, and liens
Orders management This activity includes all tasks related to the creation, preparation, delivery, and tracking of orders
Appeal preparation & processing This activity includes all tasks related to the creation, preparation, delivery, and tracking of appeals
Jury management This activity includes all tasks related to jury selection and management including:
- Summons and questionnaire preparation, delivery, and tracking
- Deferral management
- Juror impaneling, assignment, and qualification
- Juror time management and payment and closeout
Account money management This activity includes all tasks related to the creation and management of interest bearing accounts
during cases, bond repayment, and payment of law library fees
452 R.L. Raschke, S. Sen / Information & Management 50 (2013) 446–456

Annual Cost of NVA (000's)

Budget Line Items (000's)
Salary and Benefits $1,218
Lack of Technology
Office Suppli es $ 66
Profess ional Services $ 54 Knowledge & Info. Mgmt
Telecommunicaons $ 22 Cultural
Postage $ 19
SPPs
Copiers & Suppli es $ 19
Computer Suppli es $ 7 Strategy
Travel $ 5 Training & Educaon
......... ----------
Total $1,738 Resource

$0 $50 $100 $150 $200

Breakout of Acvity Costs

38.59%
Cost Allocaon
(Methods applied to acvites) 61.41%
Salary Trace
Headcount Trace
Direct Trace

Value - Added Non - Value Added

Fig. 3. NVA costs (Clerk of Courts).

Budget applied to Acvity (000's) 5.2. Using the ABM-based framework for the case management
process
Case Iniaon $ 17 2
Service/Summons Process ing $ 16 The county decided to use the value-based framework
described previously to resolve the conflict among the three
Subpoena Process ing $ 8
groups. This was achieved using a two-stage process consisting of
Fines & Fees Mgmt $ 10 6
the four steps outlined in the previous section and depicted in
Case Update Process ing $ 34 7
Fig. 1. The first stage uses the first three steps from our proposed
Calendar & Pre-Court Mgmt $ 75
framework to build a business case for the reduction of NVA
Hearing Mgmt $ 99
activities. The second stage involves step 4, which uses the
Fail ure to Appear Process ing $ 39
information from the first three steps and applies it to creating a
Orders Mgmt $ 79
weighted request for proposals (RFP) form that vendors must
Appeal Prep & Process ing $ 22
complete to compete for the bid.
Jury Mgmt $ 11 2
Acc ount Money Mgmt $ 17 3 5.2.1. NVA analysis of the case management process
Non-Judicial Acvies $ 52 Building the business case and applying the ABM framework
General Admn Acvies $ 43 8 involved the following three procedures. First, all activities for the
case to trial process and their owners associated with the trial
Total $1 ,73 8 system were identified. For the judicial system, the activities were
identified using standardized definitions provided by a consortium
comprised by the Conference of State Court Administrators and the
National Center for State Courts (NCSC). This consortium was
Fig. 2. Cost allocation procedure (Clerk of Courts). tasked with developing guidelines to help state courts more
effectively use their resources, both financial and human, for
purposes of obtaining a state-of-the-art computer system (http://
www.ncsconline.org/d_tech/standards/). An extensive set of docu-
group failing to ‘win’ the others over to their favorite vendors, ments defines the steps involved in each type of case (e.g., traffic
resulting in a deadlock without a final vendor decision. Imple- violation, DUI) as it goes from initiation to trial to closure. These
menting three different systems would not maintain their overall documents were used to identify the processes, sub-processes, and
objective and would ultimately cost additional time and money. associated activities.
Recognizing this, the county leaders directed the committee to Table 2 provides an example of the sub-processes and activities
make a decision using a methodology that was quantitative in associated with the Clerk of Courts department. The budget for this
nature and not based on qualitative reasoning or personal department is approximately 25% of the overall judicial system’s
influence. annual budget. The Clerk of Courts is considered the largest of all
 R.L. Raschke, S. Sen / Information & Management 50 (2013) 446–456
RFP: System Funconality
NVA
ID
impact
Clerk of Courts - Juror
1243 Traverse Jury Summons Form
1244 Juror Questionnaire Form
1247 Ability to produce report: Previously Selected Jury
1248 Ability to produce report: Jury List
1249 date
Ability to produce status report of # jurors excused, impaneled,
1250 deferred
1251 Ability to produce status report of Detailed deferral statistics
1253 referenced with case information
1254 Ability to Draw jury
1255 Ability to select a jury
Fig. 4. RFP example, Clerk of Courts – Jury management activity.
eleven departments. Similar analyses were performed for each of
the other ten departments.2
Second, an analysis was conducted to allocate costs to these
activities within each subprocess. Employee surveys were used to
document time allocation and perceptions regarding which
activities are value-added vs. non-value-added. The cost allocation
required the use of three methods: Salary trace, Headcount trace,
and Direct trace. The Salary trace method allocates costs to an
activity using a weighted average of the salaries of the individuals
required to perform the activity. Headcount trace allocates the
costs of certain items (e.g., stationary) used in an activity according
to the number of individuals associated with the activity. Finally,
the direct trace method allocates costs that are directly related to
an activity (e.g., maintenance payment for a printer used to print
pay-checks). Fig. 2 illustrates how the budget line items were
allocated to the activities in the Clerk of Courts department.
Third, inhibitors of the activities that are the most costly for the
department are identified. During facilitated sessions, participat-
ing employees were asked to identify barriers to success in
performing their various activities. These barriers to success, or
cost drivers, are typically the issues that prevent maximum
efficiency and often cause rework and/or NVA activities to occur.
Such barriers identified by the employees are grouped into one of
the pre-specified categories provided in Table 1. For example, a
lack of technology was a consistent NVA inhibitor for all of the
eleven criminal justice departments. Seven of the departments
shared a common technology platform, although many of the
modules were not integrated across those departments. The other
four departments used different software packages that did not
communicate or integrate with those of any of the other
departments. As a result, case files created in one department
with one application and then transferred to another department
using a different application caused the second department to
recreate the file from scratch. In addition, information sharing and
inter-departmental queries were impossible, causing excessive
manual research and information retrieval. Fig. 3 provides a further
breakdown of the activity costs identified in the previous step to
identify the NVA costs associated with the activities within a
department. The relative proportion of NVA vs. VA within that
department is also shown in the figure.
2
For the purpose of illustration, we use the Clerk of Courts department
throughout Section 5.
453
Vendor Response Required
Included in Bid Scope Out of Scope Comment
Enhancement
Enhancement
Functionality
Application /
Integration
Additional
to Support
Supported
3rd Party
Native
Minor
Major
Not
Fee
4
5
5
5
3
3
3
3
5
5
As the primary objective is to reduce the cost of the non-value-
added activities, discussions were held with department leaders
and employees, both from the technology and business side,
regarding the extent to which NVA activities could be realistically
reduced (e.g., 60–70%) through the implementation of an
integrated ERP system. These discussions helped identify key
functional requirements for the new system. These functional
requirements were included to create a weighted RFP detailed in
the next section.
5.2.2. Utilizing NVA analysis in the RFP and subsequent ERP vendor
selection
The RFP lists the system functionalities required for each of the
activities within a process. As illustrated in Fig. 4 (a partial view of
the activities within the Clerk of Courts department), a five point
Likert scale is used to identify the potential impact of the functional
requirement on reducing the NVA activities, with 1 representing
‘‘little to no impact’’ and 5 representing ‘‘very high impact’’.
Each vendor responds to the RFP by indicating whether its
solution addresses the functionality. If a particular functional
requirement was not part of the vendor’s solution, the vendor
needed to provide additional cost information to fulfill this
requirement. As the NVA for each activity has already been
calculated (refer to Fig. 3), we can now utilize the weighted NVA
impact (Fig. 4) to compute the total amount of NVA reduction from
each vendor’s solution. This is captured in the column ‘Annual NVA
Addressed’ in Table 3.
The significance of this step is that unlike most RFPs, where
functional line items are treated equally and vendors are scored on
the number of requirements met, the functional line items in this
RFP are weighted according to the potential impact of reduced NVA.
As is evident from Fig. 4, not all requirements impact the buyer
equally. In other words, requirements that more directly impact
NVA reduction within the most pervasive and expensive activities
outweigh requirements that have little or no impact on efficiency. By
introducing our framework and its subsequent NVA calculations
into a process, line items are weighted in proportion to their cost. As
a result, the vendor that presents the most impressive list of features
may not always have the best impact on the bottom line.
Finally, the ROI is calculated using the amount of NVA reduced
over a seven-year time period in conjunction with the cost of
implementing a new system. The total cost (column 4, Table 3)
includes the software purchase (column 2, Table 3) plus the cost of
implementation (Column 3, Table 3). The ROI represents the
454 R.L. Raschke, S. Sen / Information & Management 50 (2013) 446–456
Table 3
ERP vendor selection based on NVA mitigation.
Vendor Software cost Implementation services cost
Vendor A $25,000 $70,000
Vendor B $400,000 $990,000
Vendor C $35,000 $90,000
Vendor D $500,000 $1,400,000
benefit (amount of NVA addressed over 7 years total cost)
divided by total cost. Based on the quantitative application of the
ABM framework for evaluating the four vendors, a clear ‘winner’
emerged and the committee was able to unanimously agree on one
vendor solution –Vendor D, which had the highest estimated ROI
(see Table 3).
6. Concluding remarks and implications
The purpose of our work is to propose an ex-ante objective
evaluation framework for IT-enabled business process improve-
ment initiatives and to demonstrate how such a value-based
framework can be further utilized in selecting an IT solution. This is
performed via a rigorous analysis of the business process, the
systematic identification of non-value-added activities within the
(sub) processes, and comparing candidate IT solutions according to
their ability to mitigate NVA activities in a real-life setting. The
final outcome of the case management project represents the proof
of concept for utilizing ABM and NVA analysis in providing a
quantitative pre-assessment of IT-enabled BPI initiatives and the
creation of a weighted RFP.
From our NVA analysis, two key points emerge that have
implications for both research and practice. The first centers on the
relationship between process performance and NVA categories and
its implications for management control. The second relates to the
value of NVA analysis in vendor selection and subsequent IT
implementation success. These points are discussed in greater
detail below.
6.1. Relationship between process performance and NVA inhibitors
The NVA categories developed and presented in Section 3.2
provide a starting point for understanding the impediments to
process performance. We provide a comprehensive list that may
be utilized for identifying inefficiencies and potential for
improvement in similar BPI projects. The use of the NVA
categories in different contexts would be helpful to determine
empirically how and to what extent these inhibitors impede
process performance. More important, it is possible that
individual inhibitors impact different process performances
measures such as time, cost, quality, and customer satisfaction
to varying degrees. For example, a lack of training may have a
higher impact on customer satisfaction, whereas technological
silos impact quality the most. In other words, systematic
relationship patterns between inhibitors and key performance
indicators (KPIs) may exist. Knowledge of such relationships
enables targeting specific process areas for improvement and is
valuable for management control purposes. Finally, another
important topic to address is the need to take this evaluation
method to the next level: do the ex-ante predictions arrived at in
this manner perform better at predicting actual outcomes than
alternative methods?3 We acknowledge that contrasting such
outcomes may not be easy to implement in practice, especially
because there may be a number of methods to contrast and many
3
We are thankful to an anonymous reviewer for suggesting this.
Total cost Annual NVA addressed ROI (7 yr)
$95,000 $61,000 3.49
$1,390,000 $850,000 3.28
$125,000 $85,000 3.76
$1,900,000 $1,350,000 3.97
confounding factors. Nevertheless, we identify this as a potential
opportunity to be explored in the future.
6.2. Impact of NVA analysis on IT implementation success and vendor
selection
Our study also underscores the potential value of using the
ABM-based framework during a request for proposals (RFP). In
general, the list of requirements found in the standard contract
language in RFPs stipulates that all functional line items be treated
equally. However, as we illustrate in this paper through the use of
the ABM framework, not all requirements are/should be created
equal. Requirements that more directly influence large pools of
NVA within the most pervasive and expensive activities create a
higher functional priority than those that have little or no impact
on the process. For example, NVA calculations for a procurement
cycle RFP can weight the line items in proportion to the potential
impact of cost savings in the process. As a result, the buyer can
quantitatively evaluate the vendor by the value contributed rather
than an evaluation based on the quality of a demonstration or list
of features. While common wisdom in software development/
procurement emphasizes that an accurate analysis of require-
ments is crucial for successful implementation [e.g., [39,51]], our
study illustrates that incorporating value expectations (e.g.,
reductions in NVA) in the contract language of the RFP can
improve communication and clarify responsibilities between the
contracting parties.
A subsequent aspect of system implementation is vendor
selection, as the RFPs are intended to select both the vendor and
the solution. There are several ‘‘soft’’ criteria that often guide the
vendor selection process: vendor reputation, past relationships,
and organizational politics, to name a few. While the NVA activity
analysis provides an objective evaluation of the IT system (and by
association the vendor), the trade-off between the subjective and
objective measures is not always straightforward. Despite the
recognition that IT investments are best evaluated at the business
processes level, ‘‘process level analysis is still in its infancy, and there
is a need for a systematic basis for identifying IT effects’’ [14] (p. 66).
As the value-based framework proposed in this paper is applied
closest to the primary ‘‘locus of value’’ (i.e., the business process
level [18]), it can be used as a complement to traditional IT
investment evaluation methods based on financial measures. Seen
in a different way, the ABM-based IT evaluation framework may
also be used as a lens for assessing the business value of BPI. In this
respect, further (and preferably empirical) investigation is
required to compare the traditional methods of value measure-
ment with our proposed approach.
At this point, challenges in implementing the proposed
approach should also be acknowledged. The literature on business
process change/re-engineering [29] has cited the human factor as
an important variable, and our experience confirms the signifi-
cance of this variable. Particularly, two points are worth
mentioning. First, there was tremendous resistance from those
actors whose tasks were labeled NVA activity (e.g., the manual
reentry of case records). Accordingly, such BPI endeavors must be
accompanied by a management plan to appropriately communi-
cate the potential benefits and possibly also redefine employee
 R.L. Raschke, S. Sen / Information & Management 50 (2013) 446–456
roles and responsibilities. The second point concerns using the
weighted RFP in comparison to the traditional method of
exclusively using the feature sets in selecting the solution. As
this was a step away from the conventional way of doing business,
initially (somewhat) political groups had formed among the
decision makers that required subsequent intervention by
management.
In conclusion, we establish ABM as a standardized methodology
that enables a quantitative assessment of how different activities
may impact process performance and subsequently measure the
potential for process improvement. The feasibility of this approach
is explored via an actual BPI project evaluation of an integrated ERP
solution for the various departments within a county’s court
system. The study illustrates how a value-based framework can be
utilized in process improvement initiatives by reducing the impact
of specific non-value-added activities on performance measures.
The NVA analysis also helps in weighting functional the line items
required for evaluating vendor proposals. As process monitoring
and evaluation is fundamental to management control and
accounting, our work contributes to the stream of research that
explores the links among IT, process improvement, and firm
performance.
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Robyn Raschke is an associate professor at the
University of Nevada Las Vegas. She received her Ph.
D. in Information Systems from Arizona State Universi-
ty. Her research interests focus on performance
measurement and the effects of information presenta-
tion on decisions. Her work is published in Information
& Management, Journal of Business Research, Journal of
Information Systems, International Journal of Accounting
Information Systems, and various information system and
accounting conferences.
Sagnika Sen is an Assistant Professor of Information
Systems in the School of Graduate Professional Studies
at Pennsylvania State University. She received her Ph.D.
from Arizona State University. Her research focusses on
various aspects of Business Process Management,
especially performance management and incentive
design. She has published in a number of academic
journals such as Information Systems Research, Journal of
Management Information Systems, Decision Support
Systems, Communications of the ACM, and Human
Resources Management.